SENATE DEMS ENABLE MEDICARE TO NEGOTIATE (SOME) DRUG PRICES — Senate Democrats pushed through a provision of the Inflation Reduction Act that would allow Medicare to negotiate prescription drug prices with drugmakers. The bill passed in a 51-50 vote Sunday morning. The section within the bill, which the House is expected to pass Friday, has been on the minds of lawmakers on both sides of the aisle in some form for more than a decade. "This is a monumental step forward and tackling the costs of some of the most perniciously expensive prescription drugs in the Medicare program, drugs that have been on the market for substantial periods of time and yet don't face any generic competition," Sean Dickson, the director of health policy at the West Health Policy Center, a nonprofit organization focused on lowering health care costs, tells Katherine. Negotiating will start with a narrow sliver of drugs: In 2026, Medicare will be able to negotiate the price of 10 predetermined prescription drugs patients can take at home. Those drugs, which fall under Medicare Part D, must have been on the market for at least nine years without any competition. The total annual amount the Centers for Medicare and Medicaid Services paid pharmacies most recently for the drugs will largely inform which products make the list. Then CMS and the drugmakers will negotiate the prices for the drugs that CMS will pay. Medicare will add 15 more drugs to its negotiated list in next year and then again in the following year. In the third year, it will add 20 more drugs that, in some cases, may need a health care provider to administer. Drugs for which a generic comes to market will be removed from the list, and drug prices can be renegotiated if a drug reaches 13 years without a competitor. Stunted growth? The pharmaceutical industry has argued that the negotiations will discourage competition and has threatened to fight the bill with litigation even after it is signed into law. But experts say that may not be the case. There will always be demand for better therapies — whether they are more effective or easier to take. "You can still capture a larger market share of the unmet medical need by developing a therapy that is more patient-accessible," Dickson said. Rachel Sachs, a law professor at Washington University in St. Louis who specializes in innovation policy and drug regulation, thinks the provision may encourage competition, at least for some types of drugs. "You could imagine that it would be in a biologic manufacturer's interest to allow biosimilar competition rather than to be eligible for negotiation," she told Prescription Pulse. "What this [bill] does is say, 'Let's look at how price declines usually happen when generics come on the market and let's try and mimic that set of price changes,'" said Dickson. Beyond negotiation: For now, Medicare beneficiaries would be the only ones to directly benefit from CMS' negotiating powers and an annual $2,000 out-of-pocket limit on drug spending in the provision. People on Medicare who use insulin would also benefit from that drug's $35 out-of-pocket copay cap. The bill also requires drug companies to pay a rebate to Medicare if they raise prices faster than inflation. Even though the Senate parliamentarian stripped private insurance from the provision, Dickson argues that it will still ultimately affect the commercial market: "Inflation penalty on only a part of the market does hold down price growth for the entire market, but it won't do it in the one-to-one perfect way that the legislation has been intending," he said. Experts still don't have a clear picture of the total impact of these provisions. "There have been other efforts and will continue to be other efforts — legislative, administrative and economic — to try to make these products more available to patients," said Sachs.
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